Entrepreneurial Strategic Decision-Making
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Entrepreneurial Strategic Decision-Making

A Cognitive Perspective

Patrick A.M. Vermeulen and Petru L. Curseu

Strategic choices made by entrepreneurs have major consequences for SME performance. This book explores the factors that influence entrepreneurial strategic decisions using a cognitive theoretical framework.
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Chapter 10: Social Capital, Cognitive Complexity and the Innovative Performance of SMEs

Daniëlle G.W.M. van Gestel


Daniëlle G.W.M. van Gestel 10.1 INTRODUCTION Small and medium-sized enterprises (SMEs) can be seen as the engines of economic development (Brouthers et al., 1998; de Jong, 2004). The success of these firms is influenced by the strategic decisions made by entrepreneurs. Innovations are often the result of such strategic choices and are important sources for SMEs’ competitiveness. As indicated by van Gils (2005), it is crucial for SMEs to innovate since enterprises that innovate have higher long-term returns and are more likely to survive over time. Since the 1980s and in close association with the theoretical and methodological developments in social network analysis, the importance of social relationships of the entrepreneur for SME effectiveness has received considerable attention (Cope et al., 2007). This perspective focuses on the fact that economic activity is embedded in society and very often the most innovative entrepreneurs are part of a large social network (ibid.) from which they get valuable information, financial and often emotional support. In their recent work, Anderson et al. (2007) indicated that individuals with strong social relationships are able to achieve more compared to when they act alone. Cooke and Wills (1999) showed that the presence of social relationships can contribute to the availability of information, something that could reduce the uncertainties that entrepreneurs are facing. The presence of social capital, which can be seen as resources based on group membership, relationships or networks of influence (Inkpen and Tsang, 2005) seems to be valuable for entrepreneurs. Cope...

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